Page 3 QUESTION ONE A (2) (5 Marks) (1 Mark Each) Presented below are the basic assumptions and principles underlying financial statements a. b. c. Historical cost principle Economic entity assumption Full disclosure principle d. Going concern assumption e. Monetary unit assumption f. Prodicity assumption Identify the basic assumtion or principle that is described below. 1. The economic life of a business can be divided into artificial time periods (1) 2. The business will continue in operation long enough to carry out its existing objectives (1) 3. Assets should be recorded at their cost. (1) 4. Economic events can be identified with a particular unit of accountability (1) S. Circumstances and events that make a difference to financial statement users should be disclosed () artificial time periods ()